Posted tagged ‘Economy’

Is a Double Dip Inevitable?

June 7, 2010

Monday morning is rarely greeted with joy by the UK’s workforce (unless, perhaps, it is a Bank Holiday) – and this morning provided enough economic doom and gloom to remind many of this time last year.  Within minutes of markets opening, shares and the euro had plunged on renewed fears of a double-dip recession.

Is it really inevitable that another round of negative growth is around the corner, or is this just jitters and speculation?

There are, as ever, various arguments.  Some say that it is likely that another recession could take place, especially as the European debt crisis seems to show no signs of calming down.  On Friday, Hungary threatened to be the next Greece, with a huge deficit percentage of GDP and government indications of a default (which were rebuffed by former officials – by which time the damage had been done).

Others argue that healthier economies are strong enough to carry this weak spot – and enough to prevent another all-out recesssionary period.

Whichever is more likely to come true, markets are a hive of nerves and jumpiness in these times.  And the euro has once again sunk to a four-year low against the dollar.

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Clegg Puts Spanner in Election Race

April 16, 2010

The pound fell broadly early this morning on the foreign exchange market.  Why?

Last night the three main political parties took part in a television debate, with Liberal Democrats leader Nick Clegg winning the majority of audiences.  While Gordon Brown (Labour) and David Cameron (Conservatives) may have been expecting an easier ride, Clegg used his moment in the spotlight to appeal to viewers and the studio audience with what he hoped was a fresh approach.

But while the Lib Dems might be enjoying their newfound popularity stakes, it does throw a spanner in the works for the outcome of the general election.  With Clegg’s new level of support, the other parties will once again be left in a very similar bracket – meaning a hung parliament is back on the cards.

Once again, investors are wary of the pound.  Once again, the election race takes a new and interesting twist.

Seven-Week High for Pound

April 15, 2010

The pound is so far having a good old week.  Having reached a high against the US dollar on Wednesday, it reached a 7-week high today after a poll showed that the opposition Conservative party have a clearer lead against the Labour party.

In the past weeks and months, a hung parliament has looked ever more likely with neither party showing signs of being a clear majority winner.  The Tories have always managed to stay slightly ahead but the level shrunk until the future of Britain’s political leader was less and less clear.  International investors have been avoiding the pound with the cloud of uncertainty hanging over the UK and it is likely that the overall shakiness will remain until the general election takes place in early May.

Britain has actually been enjoying a rather positive week in general, with a lashing of good data announced in the trade deficit and retail sectors.  Does this mean that the economy is picking up quicker than expected?  Can Britons plan their future with a Conservative government and will the budget deficit be cleaned up under their leadership?

Tonight on British television will be a live debate between party leaders – how each performs could have a significant effect on consumer, economic and fiscal sentiment.

4th Quarter GDP Better than Expected

March 31, 2010

Tuesday brought some surprising news for economists: fourth quarter growth figures were revised upwards!  Now, it seems the UK economy grew by 0.4% and what is more, this was the final revision.  Having started with a minute 0.1% , we now know that the country exited the recession faster than had been thought!

However according to another survey consumers are still worrying about the economic outlook for the country.  In March, consumer confidence fell somewhat yet the risks of a double-dip or ‘W’ shaped recovery are still not significant.

Some accused media hype surrounding Alistair Darling’s latest Budget announcement as the reason for consumer fears.  Around his announcement, much was made over Britain’s large deficit and the Chancellor’s lack of drastic plans to clear this debt quickly (he currently plans to halve it in four years).

The pound edged up on the good GDP news.

Euro Saved by Greece Bail Package?

March 26, 2010

EU leaders have reached an agreement to help Greece with a package of €22 billion.  The country, with a vast deficit which is eating on the euro currency has, in the past months, been at the centre of EU debates.

While the currency exchange market was speculating on Greece’s future and that of some other Eurozone countries, the euro took enormous pressure.  Indeed, there were even record amounts of euro -selling from international investors, enough to make a few EU leaders call for an end to over-selling and the damage that speculation can do.

Now, Greece will receive a boost to fix its problems, but is it enough?  Currency investors certainly seemed to be mollified by the news as the euro rose by around half a cent on the news against the US dollar and by nearly half a penny against the pound.

Pound Stable…for Now

March 11, 2010

The pound managed to stay flat against the US dollar and the euro in this morning’s trades, as currency exchange traders lost momentum on sterling sell-off.

However, more weakness is forecast for the pound…here are some the reasons why:

Gordon Brown VS David Cameron – no clear winner

The upcoming general election looks set to result in a ‘hung parliament’ – a situation which means no party is a clear winner over the other.

Weak UK Economy

It seems as though fresh data is announced every week, and lately much of it isn’t exactly ideal.  The most recent numbers to cause investors to avoid the pound were those showing worse-than-expected manufacturing output.

Poor Public Finances

Actually, the deficit in the UK isn’t that far off from that of Greece.  Gordon Brown has now called for civil servant pay freezes – but is it enough to stem the problem?

Sarkozy – Public Display of Support for Greece

March 8, 2010

Greece got a boost from French President Nicolas Sarkozy yesterday, after talks between himself and Greek Prime Minster George Papandreou.

So far, EU leaders have been less than enthusiastic about helping Greece in a big bailout package.  Luckily for them, the country does not (so far) need a package, having already announced austerity measures to tackle the massive 12.7% deficit problem.

Mr Sarkozy attacked speculators on the foreign exchange market and on the bonds market, for attacking the euro.  Indeed, in recent months the amount of positions against the euro reached record levels.  However, after the French President’s comments, the currency took a boost and rose against the US dollar.

Are speculators going too far, or are they right to avoid the single currency as Greece – and possibly other EU nations – struggle to tackle their major fiscal problems?